1. Create a system to track your mileage

The first step to tracking mileage for taxes is understanding that you’re eligible. In nearly all cases, anyone who is driving their personal vehicle for work can take a tax deduction for those miles as long as they aren’t being reimbursed elsewhere. 

As an Independent business owner, you’re likely using your personal car to drive to client meetings, events, conferences, stores to get supplies, and much more. Unlike corporate employees, you also probably aren’t getting reimbursed in the form of a stipend or company car. 

Each mile you drive adds up fast, which is why it’s important to develop a strategy to track your miles. We’ll dive more into specific tools to log your miles, but for now, think about an easy system that makes sense for you. You can write down your odometer reading once a week if you want a manual process or use a mileage tracker app that helps you record your daily miles.

2. Always track total mileage

Even once most small business owners start tracking mileage, they aren’t tracking the total miles that are eligible for deductions. You might not think the smaller trips count or even think of certain trips that fall under the business category, but they’re all eligible! You should be documenting all of the following (and more): 

• Client visits
• Conferences
• Job site visits
• Getting gas
• Grabbing food for a meeting or event
• Trips to buy office supplies

3. Keep a contemporaneous log of miles driven

In a perfect world, you should be keeping a mileage log for your business miles every day. Keeping a contemporaneous log means that you have a record of your miles that you can present to the IRS.

4. Use your home office as a principal place of business 

While you can take a tax deduction for the work miles you drive, you can never deduct your commute to and from work. This means that you can’t deduct your drive to and from your principal office. If you don’t have a regular office, you cannot deduct your drive from home to your first business event or from your last appointment to home. 

However, one way to avoid the commuting rule is to have a home office that qualifies as your principal place of business. In this event, you can take a mileage deduction for any trips you make from your home office to another business location. You can deduct the miles you drive from home to your second office, a client’s office or to attend a business-related seminar. 

5. Know which total miles you can deduct

This one might sound a bit silly, but we get this question every day! The short answer is that you can deduct ANY driving you do for business, as long as it’s not your commute and you weren’t reimbursed for it. 

Examples of deductions that are often overlooked include: Travel between offices, running errands or picking up supplies, business meals and entertainment, trips to the airport for business trips, customer visits, and trips to temporary job sites. 

Additionally, if you’re job hunting, you can deduct the miles that you drive to find a new job in your current occupation. But, you can’t take the deduction if you’re looking for a job in that field for the first time.

Choosing the standard mileage or expense method

If tracking and logging your mileage seems like too much work, you can also choose to deduct actual car expenses. With the expense method, you’re able to add up everything that goes into operating the car, such as gas, lease payments, tires, repairs, insurance, and registration fees. 

The method you choose is all dependent on what would be most beneficial for your business. However, if you want to use the standard mileage method, you have to do so during your first year in business. Afterward, you can switch back and forth between the two methods if you choose to do so.

Keep track of additional business expenses

While running your business, you can also deduct additional travel-related expenses, such as parking fees and tolls. Be sure to view a full list of business tax deductions each year to think through what you’re eligible to report and which category each deduction falls into. 

As you’re filing your taxes and deductions, just keep in mind that you need to keep your business and personal expenses completely separate. You won’t be allowed to report any deductions for personal expenses.